america's new business plan 2022

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Kauffman Foundation releases America’s New Business Plan for 2022

The Ewing Marion Kauffman Foundation in Kansas City, Missouri, has announced the release of a policy plan designed to create a more inclusive economy by building a prepared workforce and prioritizing entrepreneur-focused economic development.

The four-part approach, America’s New Business Plan for 2022 (31 pages, PDF), aims to create a more inclusive economy by taking a holistic approach to addressing systemic disadvantages and providing access to opportunity, funding, knowledge, and support. Policies outlined in the plan include: incentivize coordination across agencies to simplify all federal, state, and local procedures, forms, licenses, and permits required to start a business; catalyze financial innovation that can use technology to reduce bias and barriers for Black- and Brown-owned businesses; incentivize state-level departments of education to provide districts flexibility in funding, credit, and curriculum to allow students to obtain real-world learning experiences and credentials; and expand childcare programs in the most underserved communities through increased funding for the Child Care and Development Block Grant and Head Start programs.

According to the foundation, Black households have a median net worth that is one-tenth of typical white households, and Latino households face a similar wealth gap; men are still significantly more likely than women to secure funding when pitching an identical business; and loan requests from Black entrepreneurs are three times less likely to be approved than those of white entrepreneurs.

“From its inception, the Kauffman Foundation has focused our efforts on creating systems that foster a prepared workforce and entrepreneur-focused economic development,” said Kauffman Foundation president and CEO Wendy Guillies. “To truly be successful, we need to implement policies that focus on growing an inclusive economy. Our economy has worked in favor of some over others for far too long, and by implementing the ideas in America’s New Business Plan, we have a real opportunity to make sure our country’s continued economic recovery is as equitable as possible.”

(Photo credit: Getty Images/Geber86)

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Joseph R. Biden

Fact sheet: the new small business boom under the biden-harris administration.

Since day one in office, President Biden has focused on providing America's small businesses with the tools and resources they need to reopen, rehire, and build back better. To-date, the Biden-Harris Administration has distributed more than $400 billion in critical relief to more than 6 million small businesses.

President Biden's efforts have not only helped millions of Main Street businesses keep their lights on and employees on payroll, they have enabled a remarkable rebound in small business activity, with small business demand for labor and inventories near record highs. According to a leading survey of small business owners, the share of small businesses planning to create new jobs in the next three months is higher than it ever was at any point during the previous Administration. Another recent survey of small business owners found that 71 percent are optimistic about their own performance in 2022, up from 63 percent one year ago. The broader economic recovery – one of the fastest on record – has also helped spur a surge in entrepreneurship. Americans are applying to start new businesses at a record rate, up about 30 percent compared to before the pandemic.

The historically high level of new business applications has taken place amidst the Biden-Harris Administration's historic bottom-up approach to economic recovery. Soon after taking office, the Biden-Harris Administration enacted the American Rescue Plan (ARP), which provided direct relief to families and small businesses and supported the vaccination of more than 200 million Americans. Through the combination of ARP investments and existing emergency relief programs, the Biden-Harris Administration distributed more than $400 billion in critical relief to more than 6 million small businesses. The ARP also provided thousands of entrepreneurs with the personal and financial security to launch their own business. This support included $1,400 per-person Economic Impact Payments, expanded Child Tax Credit payments of up to $300 per child per month, Affordable Care Act credits and COBRA premium support to ensure health care coverage remained available, and an expansion of the Employer Retention Credit, including expanding eligibility to recent startups.

Despite the historic progress made to-date, the Biden-Harris Administration remains committed to helping America's new small businesses grow, create jobs, and provide the essential goods and services our communities depend on. Specifically, the Biden-Harris Administration is:

• Expanding access to low cost loans and investments. The Treasury Department is working with all states and territories plus 400 Tribal governments on standing up small business lending and investment programs as part of the $10 billion State Small Business Credit Initiative (SSBCI) established through the ARP. and By this summer, the first wave of programs will launch, unlocking billions of dollars in new lending and investment capital for small businesses in big cities and small towns all across America. Small businesses can also continue to access the Small Business Administration's (SBA) traditional 7a, 504, and microloan programs, which collectively reached record high loan volume in Fiscal Year 2021 by providing $44.8 billion through more than 61,000 loans .
• Increasing access to billions of dollars in federal contracts for small businesses. Last year, the Biden-Harris Administration announced its strategy for increasing the share of federal procurement dollars that go to socially disadvantaged businesses by 50% by 2025. President Biden's Bipartisan Infrastructure Law also includes a historic procurement effort designed to support small businesses and tackle long standing inequities in the contracting system. Among other things, the legislation directs DOT to attempt to award more than $37 billion in federal contracts to small disadvantaged business contractors.
• Helping small businesses hire new employees and reach new customers by providing universal broadband . Broadband internet is necessary for Americans to do their jobs and increasingly important for small business owners all across America. President Biden's Bipartisan Infrastructure Law will invest $65 billion in broadband infrastructure, helping ensure that every American has access to reliable high-speed internet and creating new opportunities for small businesses nationwide.
• Connecting small businesses to the resources they need to grow and succeed. The SBA Community Navigator program launched last year and is deploying trusted messengers in underrepresented communities to offer small businesses a broad array of support services. The Bipartisan Infrastructure Law made permanent the Minority Business Development Agency (MBDA), elevated its Director to Under Secretary of Commerce, and gave the agency more tools and authority. SBA also recently launched the Small Business Digital Alliance , a public-private partnership to offer small businesses with critical tech resources to start and expand their e-commerce business, with an eye toward scaling for success.

Joseph R. Biden, FACT SHEET: The New Small Business Boom Under the Biden-Harris Administration Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/354248

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America’s New Business Plan for 2022

June 14, 2022 by Kent Nutt

Bringing a Policy Focus to Building an Economy that Works for Everyone

I attended a virtual briefing from the Ewing Marion Kauffman Foundation for the recently released America’s New Business Plan for 2022 . The briefing provided an overview of the entrepreneurial policy priorities in ANBP 2022, and suggested ways that Start Us Up Coalition Members can get involved in amplifying them.

Start Us Up is a diverse coalition of organizations (including Santa Fe Innovates) working to level the playing field for entrepreneurs in America. The coalition spans the entire nation and includes entrepreneurship support organizations, nonprofits, university centers, and more.

ANBP 2022 is a nonpartisan, policy roadmap with strategies for creating a more inclusive economy by building a prepared workforce and concentrating on entrepreneur-focused economic development. Key to this strategy are tactics to nurture entrepreneurs from diverse and often underrepresented backgrounds. 

Addressing Entrepreneurial Inequity

Entrepreneurship can be a path to sustainable growth and prosperity, but only for those that can navigate its barriers to entry. The path is much more accessible to those who are white, male, and wealthy. Ensuring equal opportunities for all entrepreneurs require actions that address the underlying and entrenched systemic barriers.

As discussed in the business plan’s executive summary, being “pro-business” has come to represent favoring big business in today’s politics. And when the government does act to help American enterprise, support is heavily focused toward established businesses – not struggling startups, new business owners, and entrepreneurs. The irony is that new businesses created by entrepreneurs are the primary source of almost all net new jobs.

Our nation’s wealth gap is especially evident throughout the process of starting a business. Black households hold a median net worth that is one-tenth of typical white households — with Latino households facing the similar disparity. With less personal wealth, minority business owners must seek outside funding, except black entrepreneurs see their loan requests approved  three times less  than those of white entrepreneurs — a difference that persists even after accounting for credit scores and net worth.

These inequities continue for women and those who live in rural geographic areas. The gender pay gap puts a disproportionate strain on female entrepreneurs, and more than 80% of all venture capital continues to flow toward the three coastal states of California, Massachusetts, and New York.

The Four Pillars at the core of this new business plan include: Access to Opportunity, Access to Funding, Access to Knowledge, and Access to Support. For this blog post, we will review one policy recommendation from each of the Four Pillars. Please read the additional policymaking issues and proposed solutions in the Four Pillars sections within ANBP 2022 .

Four Pillars of the New Business Plan

1. access to opportunity – establish a level playing field that reduces barriers (content from anbp 2022).

For startups, entrepreneurs need a level playing field to compete with established businesses, which have better access to policymakers. Among other things, this means economic development efforts should support local business owners and not just offer incentives to attract outside businesses. Policymakers should prioritize the development of supportive ecosystems that help everyday Americans start businesses and they should cut red tape that holds people back.

Streamline the process of starting a business – The regulatory requirements of starting a business are confusing, especially for immigrants navigating cultural and language barriers. To open a restaurant in Boston, for example, entrepreneurs must endure a grueling 92-step process that requires 22 forms, 17 in-person visits, and 12 separate fees totaling over $5,000.

Federal, state, and local governments should support the following policy solutions:

• Create federal and state monetary incentives for local authorities to reduce barriers to starting businesses, including reducing paperwork and restrictive fees. Funding could be made available, for example, to local governments to create and distribute a single resource or website listing all requirements to start a variety of businesses, with easy-to-understand guides that walk entrepreneurs through the permitting process.
• Incentivize coordination across agencies to simplify all federal, state, and local procedures, forms, licenses, and permits required to start a business.
• Shift policymakers’ focus to think in terms of age of a business, not size. Accordingly, the federal government should measure business performance and outcomes by age cohorts in addition to size, reporting this data publicly and using it to guide policymaking. Codifying the distinction between the age and size of a business and providing policy support for new businesses across each stage of the entrepreneurial journey will better enable everyday Americans to start businesses and, in the process, employ millions.

Supporting Evidence

• In response to the COVID-19 pandemic, San Francisco adapted their local rules and regulations around starting a business. This includes allowing all applications for storefront use to be reviewed within 30 days (compared with the months it would previously take), ensuring parallel cross-department application reviews to speed up the application process, and relaxing zoning ordinances and regulatory rules. San Francisco is also modernizing zoning restrictions to allow businesses to open more quickly by making more businesses eligible for streamlined approval in neighborhood commercial zones.

2. Access to Funding – Create a holistic, accessible, and innovative approach to capital (Content from ANBP 2022)

Capital remains among the most impactful ways to strengthen access to entrepreneurship. Today, at least 83% of entrepreneurs do not access bank loans or venture capital when launching a business. The ongoing impact of past discriminatory policies, such as redlining, must be countered and new investments made to ensure we are supporting entrepreneurs of color as well as women and rural Americans who have less access to funding in the private market. When business owners do not have access to personal funds or quality capital, they are less able to take the risks necessary to grow their businesses, artificially stifling the marketplace.

Invest in Local Financial Institutions

As evidenced by the initial distribution of Paycheck Protection Program loans, a variety of factors, such as bias and lack of preexisting relationships, led to racial disparities. Community development financial institutions (CDFIs) and minority depository institutions (MDIs) are important sources of capital for new and small businesses, and they have stepped up in recent years to fill the capital gaps further exposed in the COVID-19 recovery programs. Yet these local financial institutions face issues of capitalization, regulatory complexity, and organizational capacity.

To improve access to capital, policymakers should:

• Expand the U.S. Treasury Department’s CDFI Fund’s impact by allowing CDFIs to apply for both technical assistance (TA) and financial assistance (FA) in the same cycle. Currently, non-Native CDFIs have to apply for either an TA or FA award each year. They cannot apply for both even if they have both programmatic and capacity-building needs.
• Consider adding prioritization or incentives for for-sale affordable housing within the CMF program to emphasize wealth-building.
• Make the 30% allowance for economic development the default option in the application.
• Provide more funding to Small and/or Emerging CDFI Assistance (SECA) CDFIs . Normally, SECAs have to demonstrate matching funds to receive CDFI Fund grants, similar to the larger “core” CDFIs, but unlike Native CDFIs. This is a significant resource drain on smaller and emerging CDFIs, which also tend to be minority-led and/or closest to their communities.
• Encourage the capitalization of local financial institutions by backstopping “equity-like” investment in CDFIs and MDIs and strengthening investor tax credits.
• Work with philanthropic organizations to create funding pools that reduce risk and interest of CDFIs’ short-term lending to businesses not eligible for SBA loans.
• Establish community deposit programs or expand existing community deposit programs to facilitate greater lending to new and small businesses.
• While only 22% ($1.8 trillion) of bank loans in 2014 came from community banks, these local financial institutions accounted for more than 50% of all small business loans.
• Analysis of early lending through the Paycheck Protection Program (PPP) found that more PPP loans were made in states where small, local banks have a bigger share of the market.
• From 1994 to 2019, the CDFI Fund awarded nearly $3 6 billion to CDFIs. With an annual budget of $250 million in 2019, the CDFI Fund helped spur the financing of more than 19,000 businesses in underserved areas that lacked access to traditional lending.

3. Access to Knowledge – Real world experience for the workforce and to start a business (Content from ANBP 2022)

The fast-paced advancement of technology and the globalization of our businesses and economy require that our workforce and our future generations are well prepared to make or take a career. To have a prepared workforce and support entrepreneurs, we need to expand our education systems to include real-world learning experiences and hold systems and institutions accountable, preparing the next generation to be problem solvers and creators of change.

Corporations and education systems need to work together to develop the pathways that make these experiences easier to find and inclusive of all students regardless of race, gender, or geography. Finally, communities need to work at every level to democratize access to the connections and networks that build social capital.

Develop Inclusive Entrepreneur Support Mechanisms

Entrepreneurs value support from skilled professionals through avenues such as strong networks, cooperative platforms, co-working hubs, and high-quality incubators and accelerators. Government should support the growth and development of those methods and others to connect entrepreneurs with helpful people and tools. Policymakers should:

• Incentivize local mentor resource partners – both nonprofit and governmental – in funding packages intended to increase the number of underrepresented entrepreneurs.
• Individuals with a mentor are five times more likely to say they are planning to start a business than those who do not have a mentor.
• Business owners who have more hours of mentorship report more revenue and employment growth than business owners with fewer hours.
• The introduction of accelerators to a region has a significant impact on the number of early-stage deals for new businesses, and these deals are driven primarily by the emergence of local, new venture capital firms.

4. Access to Support – The ability for all to take risks (Content from ANBP 2022)

Becoming an entrepreneur can mean leaving behind the stability of a traditional job and steady income or starting from scratch through gig work or while being unemployed – a daunting proposition for anyone, but especially for the many Americans living paycheck to paycheck or with little savings.

Having access to a safety net makes risk-taking far more viable. Policymakers can ensure the next generation of entrepreneurs is not locked out of opportunities to improve their economic situations by helping all Americans build stable, mobile, and – eventually – prosperous financial futures.

Provide Health Care Options for Early-Stage Entrepreneurs

The need for health insurance can prevent entrepreneurial risk-taking, contributing to “job lock,” a situation in which employees stay at their current jobs because leaving would result in the loss of benefits they value. To reduce the effects of job lock, policymakers should:

• Facilitate the development of a system of portable benefits that follow workers as they move across jobs or out of the workforce to start a business.
• Provide tax incentives to new businesses to offset health care costs.
• Among those who have seriously considered entrepreneurship but ultimately decided against starting a business, 20% cited the need for health care coverage as a reason.
• A 2010 study found that increased tax deductions for health insurance for self-employed workers increased the likelihood of new business creation.
• Research found that prior to the passage of the Affordable Care Act (ACA), self-employed workers were twice as likely to be uninsured, and workers who had employer health insurance were 2.5 to 3.9 percentage points less likely to create a new business.
• Research shows the ACA has led to a 3% to 4% increase in self-employment.

As a country, we have yet to create a level playing field for all our communities. This requires a new collaborative approach that provides entrepreneurs the opportunity, funding, knowledge, and support necessary to reduce barriers to entry and spur more startups across the country, and an approach that provides access for students of all ages to gain the skills necessary to succeed.

ANBP 2022 offers a new, nonpartisan policy roadmap to create a more inclusive economy by building a prepared workforce concentrating on entrepreneur-focused economic development. The four-part plan focuses on creating new, good jobs and rebuilding an economy that works for everyone, with practical and achievable ideas that can be implemented starting now.

The specific policies outlined in this business plan are aimed at helping federal, state, and local governments close gaps on race, gender, and geography while increasing opportunity for all and growing the economy. Both policymakers and business leaders benefit from meaningful engagement with each other. Reaching out to better understand entrepreneurs’ priorities and roadblocks to growth helps policymakers create programs that can act as accelerants to economic opportunity.

About Kent Nutt

Kent is a marketing and communications entrepreneur in high-tech and nonprofit industries. He’s a strategic thinker and hands-on implementer with experience building end-to-end, transformative marketing and communications programs for startups, Fortune 500 companies, growing nonprofits, and academia. Sectors included telecommunications, 3D printing, network software, semiconductors, web analytics, and scientific research.

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2022 edition of “America’s New Business Plan” released by Kauffman Foundation

The four-part plan prioritizes a prepared workforce and entrepreneur-focused economic development through policy solutions to build an economy that works for everyone. The pillars and their focus are as follows:

• Access to opportunity  levels the playing field and reduces barriers.
• Access to funding  takes a holistic approach, balancing the reality of debt and equity while encouraging new, innovative capital.
• Access to knowledge  equips Americans with the real-world skills necessary to be a successful entrepreneur or employee.
• Access to support  helps more Americans take care of their families and address financial concerns that limit risk-taking.

The report can be download from this link .

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Kauffman Foundation’s new plan for American entrepreneurs demands inclusive growth

Editor’s note: The Ewing Marion Kauffman Foundation is a financial sponsor of Startland News.

W hile a stimulus plan being debated by Congress includes funding to stabilize existing business — it’s not enough, the Start Us Up coalition said Tuesday, echoing a call to action by one of the nation’s leading advocates for entrepreneurs.

“Congress needs to take additional steps to the spur the creation of thousands of new businesses to strengthen the economy — particularly for people of color, women and rural residents,” according to the coalition, a group of 200 entrepreneurship advocates who champion the updated recommendations of America’s New Business Plan — a bipartisan policy roadmap released Tuesday by the Ewing Marion Kauffman Foundation.

The coalition called the ongoing COVID-19 outbreak and racial inequity “dual pandemics” shaking the U.S. economy .

Philip Gaskin, Ewing Marion Kauffman Foundation

Kauffman’s revised plan includes recommendations for policies that directly impact new and small businesses as well as much larger issues that limit access to entrepreneurship and prosperity.

Click here to read a message from Wendy Guillies, president and CEO of the Kauffman Foundation, “Let’s commit to fulfilling the promise of our nation, together.”

“Moments of crisis are also moments of opportunity,” said Philip Gaskin, vice president of entrepreneurship at the Kauffman Foundation. “We have witnessed firsthand communities demonstrating resilience and mutual support during this time of need. But, our communities need help. Now is the time for America to ensure that the best and boldest ideas for supporting entrepreneurship are inclusively discussed, debated, and acted on to level the playing field for all entrepreneurs.”

Among the policy demands detailed in the plan:

• Creating universal access to affordable broadband technology so all Americans can access the internet;
• Closing wealth gaps — particularly for Black and Latino families — with baby bonds;
• Investing in Black-owned banks and CDFIs that have a stronger track record of creating pathways to homeownership and entrepreneurship for people of color; and
• Ensuring that all Americans are equipped with real-world experiences and stronger workforce training to excel in current and future careers, as employees or entrepreneurs.

Click here to read the updated America’s New Business Plan.

“America has the opportunity to transform not just in response to the pandemic, but for the long-term by strengthening policies that address racial inequality, narrow the gap between rich and poor, and raise the economic status of historically marginalized communities,” Gaskin said.

Launched in 2019, America’s New Business Plan sets out to level the playing field and create equitable access to entrepreneurial opportunities for everyday Americans striving to launch new businesses.

Additionally, the Kauffman Foundation is announcing $3.5 million in funding to support efforts to bring about these policy changes in states and cities that will strengthen access to entrepreneurship for those who are underrepresented, according to the Start Us Up coalition.

Click here to read more about the “dual pandemics” facing the U.S.

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The pandemic created an American entrepreneurship boom — and it looks like it's here to stay

• Americans filed over five million new business applications in 2022, the second most on record.
• The pandemic may have given a "lasting, positive shock to American entrepreneurship."
• But many of these new businesses could fail if the US enters a recession.

The pandemic may have forever supercharged America's entrepreneurial spirit .

Americans filed 5.1 million new business applications in 2022, according to US Census Bureau data, equating to roughly 14,000 new business applications filed every day last year . It marked the second-highest year on record — down slightly from 5.4 million in 2021 — and remained well above the 3.5 million filed in 2019. 

Of these applications, 1.7 million were for businesses that are likely to employ workers , according to an analysis by Economic Innovation Group, a bipartisan research organization. This also marked the second-highest year on record and exceeded the 1.3 million filed in 2019. In all 50 states, the number of these applications was higher than pre-pandemic levels .

"The steadiness in application levels exhibited over the course of 2022 offers optimism that the pandemic may have delivered a lasting, positive shock to American entrepreneurship," EIG's Daniel Newman and Kenan Fikri wrote in a report released this week. 

When the pandemic took hold, and Americans flocked to streaming entertainment, at-home fitness , food delivery, and ecommerce , many big established companies thought this shift would be a permanent acceleration — and hired in mass as a result. But today, businesses in these industries are reckoning with the possibility they got a bit ahead of their skis , and it's taking the form of layoffs across companies like Meta , Netflix, Amazon , DoorDash, and Peloton .

The surge in US entrepreneurship, however, which has persisted through inflation , supply chain disruptions, and recession fears , may be a more true example of a permanent consequence of the pandemic era.

Related stories

Experts have pointed to several explanations for the spike in new business applications in recent years. As millions of people lost their jobs in 2020, many decided to start businesses to make ends meet, a trend consistent with previous economic downturns . Childcare responsibilities pulled parents out of the labor force , and self-employment offered some the flexibility they needed. As workers reconsidered their working lives and sought job flexibility, some joined the Great Resignation and decided to work for themselves. Lastly, some people wagered starting a business was their best shot at getting ahead financially as inflation soared. 

The largest growth in new business applications has come from the southern region of the US — particularly Mississippi, Alabama, and South Carolina — with the region's filings rising by more than a third compared to 2019 levels. On a per capita basis, Wyoming, Delaware, and Florida were the nation's leaders in applications last year . Industry-wise, applications for transportation & warehousing, accommodation & food, and healthcare businesses have led the way. 

Many of the self-employment drivers, like the need for parents to stay home with their remote schooling children, are less relevant today, suggesting that perhaps America's entrepreneurship levels will normalize in the years ahead. But the 2022 data suggests a new normal is possible. 

"The nature and long-term impacts of the boom will become clearer over time," the EIG report said. "But this surge of supply-side experimentation suggests that the pandemic rekindled American economic dynamism at least to some extent."

It might not be all roses ahead for new entrepreneurs, however.

While entrepreneurship is generally regarded as a positive force for the American economy , there's the question of how many of these new businesses will ultimately fail . According to EIG, startups are "notoriously vulnerable," and in "good years," roughly one in every seven businesses  less than five years old fails. In "bad years," it's closer to one-in-five. 

And if the US enters a recession , some businesses that launch during this period could be "permanently scarred." 

"As the Federal Reserve continues tightening monetary policy and the probability of a recession rises, many of these new businesses — a significant chunk of which were likely founded by first-time entrepreneurs — may not survive," the report said.

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​​​​​​​u.s. commerce department releases strategic plan to boost america’s competitiveness, office of public affairs.

Today the Department of Commerce released its fiscal year 2022-2026 Strategic Plan laying out an agenda for innovation, resilience and equity to strengthen America’s competitiveness in the 21 st century.  Along with the strategic plan, the Department also published the first-ever learning agenda, through which all bureaus will build rigorous evidence on program outcomes. 

“Everything we do at the Department is focused on increasing America’s competitiveness in the global economy.  With this plan, we are positioning America’s workers and businesses for success in the 21st century.  And all Americans, especially those that have been historically excluded, will share in our prosperity,” said Commerce Secretary Gina Raimondo. 

The Department has revised its mission statement to underscore the connection between our programs and all Americans. As of today, the Department’s mission is to create the conditions for economic growth and opportunity for all communities .

The Department’s strategic plan has five goals: 

• Drive American innovation and global competitiveness . By investing in resilient supply chains, advancing emerging and critical technologies, and engaging in strategic partnerships with allies, we will expand opportunities for American innovators, workers, and businesses. At the same time, improve cybersecurity, promote intellectual property rights, and vigorously enforce our trade rules.
• Foster inclusive capitalism and equitable economic growth . By creating an economy that works for all Americans, we will translate short-term growth into long-term prosperity. Once in-a-generation investments in broadband and economic development will empower entrepreneurs in all regions of the country. Smart workforce development will align workers’ skills with industry needs and provide wraparound support so job seekers can successfully complete their training.
• Address climate crisis through mitigation, adaptation, and resilience efforts . By accelerating cutting-edge clean technologies advancing our collection and dissemination of climate data and investing in restoration and preparation, we will combat climate change, protect the ocean, and lead the world toward a clean energy future while creating millions of good-paying jobs. 
• Expand opportunity and discovery through data . By leveraging our world-class scientific and statistical tools, we will establish a level playing field for American workers and businesses in the global economy. 
• Provide 21st century service with 21st century capabilities . By deploying smart technology and modernizing our systems for hiring and procurement, we will ensure that across the Commerce Department’s 13 bureaus are focused on achieving results for the American people and American businesses.

The creation of the strategic plan was a collaborative effort involving staff from every Department of Commerce bureau and serves as a foundation for equitable economic growth and opportunity. The plan is in direct alignment with the President’s FY 23 budget request which reflects the Department’s role to drive U.S. competitiveness at home and abroad, and the Administration’s focus on economic growth and job creation. Department leaders and employees will use this plan to transform strategies into actions, and actions into results for all communities.

For more information on the Department’s strategic plan visit Strategic Plan .

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Is the Boom-and-Bust Business Cycle Dead?

There is a growing view that the U.S. business cycle has changed (for better) in a more diversified economy. To some, that sounds like tempting fate.

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By Talmon Joseph Smith

For much of modern history, even the richest nations have been subject to big perennial upswings and crashes in commercial activity almost as fixed as the four seasons.

Periods of economic growth get overstretched by increased risk-taking. Hiring and investment crest and fall into a contraction as consumer confidence wanes and spending craters. Sales fall, bankruptcies and unemployment rise. Then, in the depths of a recession, debts are settled, panic abates, green shoots appear, and banks begin lending more easily again — fueling a recovery that enables a new upswing.

But a brigade of academic economists and prominent voices on Wall Street are asking if the unruly business cycle they learned in school, and witnessed in practice, has fundamentally morphed into a tamer beast.

Rick Rieder, who manages about $3 trillion in assets at the investment firm BlackRock, is one of them.

“There is a lot of ink spilled on what type of landing we will see for the U.S. economy,” he wrote in a note to clients last summer — employing the common metaphor for whether the U.S. economy will crash or achieve a “soft landing” of lower inflation, slower growth and mild unemployment.

“But one point to keep in mind,” Mr. Rieder continued, “is that satellites don’t land and maybe that is a better analogy for a modern advanced economy” like the United States. In other words, dips in momentum will now happen within a steadier orbit.

And there is some evidence that the current spurt of economic growth may have not just months but several years to run, barring an external disruption (what economists call an “ exogenous shock ”) or a return of high inflation that prompts the Federal Reserve to push the economy into recession.

“Financial reporters and market strategists often argue about whether we are ‘early-cycle,’ ‘mid-cycle’ or ‘late-cycle,’” David Kelly, the chief global strategist at J.P. Morgan Asset Management, wrote in a March 11 note to investors that closely aligned with Mr. Rieder’s “satellite” thesis. “However, these perspectives are based on an outdated model of how the U.S. economy behaves.”

According to the National Bureau of Economic Research, the U.S. economy between the 1850s and the early 1980s experienced 30 recessions lasting an average of 18 months, with intervening periods of economic growth averaging only 33 months.

Helping drive this pattern, Mr. Kelly and other economists explain, were highly cyclical industries: Manufacturing and agriculture, now only a fraction of overall output, were once mainstays of the U.S. economy.

Today, manufacturing accounts for about $2.3 trillion of gross domestic product, employs about 12 million people and indirectly supports other local jobs. (Every manufacturing job, for instance, spurs seven to 12 new jobs in related industries, according to a McKinsey estimate.)

But the consumer-driven U.S. economy, mostly made up of services (health care, auto repair, nail salons, customer service, administration and so on), is almost $30 trillion in size. Uptrends and pullbacks in the production of goods have less impact now. The relative stability of total household spending in recent years is a key part of why the United States has avoided a recession.

America’s contemporary economy, Mr. Rieder argued in his note to clients, is less vulnerable to the boom-and-bust cycles of old — mainly because its prosperous consumers are service-oriented, less dependent than ever on factories or farms. Consumption spending makes up about 70 percent of the economy.

“Consumption doesn’t really adjust that dramatically without some major form of economic stress,” he added.

One piece of data in favor of Mr. Rieder’s “satellite” theory is the absence of any widespread weakness before the pandemic crippled economies worldwide.

That was consistent with a developing trend: Since the early 1980s, there have been only four recessions, lasting an average of nine months, with economic expansions averaging 104 months.

The current period of job growth is in its 40th month.

“You don’t want to jinx it,” Ann Harrison, the dean of the Haas School of Business at the University of California, Berkeley, said in an interview — noting that peak confidence in economic expansions frequently arrives right before their downfall. (Talk has picked up of a new “ Roaring Twenties ,” an era that didn’t end well.)

As ever, there are reasons to worry. The emergence and rapid growth of “shadow banks” operating in private markets with little oversight of their lending has concerned many economists and old-school regulators. And a range of industry insiders in commercial real estate say the negative effects of lower office occupancy rates — for local economies and government budgets — have only just begun.

Yet Mr. Kelly of J.P. Morgan lists various reasons that periods of U.S. economic growth may be elongated and less chaotic going forward. Federal deposit insurance, introduced after the Depression, sharply reduced bank panics and failures. Vastly improved information on inventory levels among goods-producing businesses, he said, has “tamed” the inventory cycle, preventing mismatches between supply and demand that can cause mass layoffs.

The rise of international trade, Mr. Kelly added, can often offset slowing domestic demand since businesses, enabled by the internet, can find customers throughout the globe. And the service sector’s growth, he concluded, has “made the economy more stable and, importantly, less sensitive to interest rates.”

Across the economics profession, many are not feeling as reassured.

When weighing recession risks, Thomas Herndon, a professor of economics at John Jay College of the City University of New York, doesn’t take much long-term solace in the growing sophistication of big business. There are, he said, “many, many, many causes” for downturns — some of which are not directly linked to financial instability.

Mr. Herndon noted the work of the 20th-century Polish economist Michal Kalecki, who argued that business leaders feel “undermined” by the maintenance of full employment. Using their substantial influence over policy, Kalecki argued, they can help institute restrictive economic policies that bring times of economic expansion to an end and reset them with softer, more tolerable labor power.

And Mr. Herndon said he thought old-fashioned “bubble” manias and “credit cycles” remained a danger, too.

Eliminating the longstanding economic cycle would be “the holy grail of central banking,” said James Knightley, chief international economist at ING, the global bank. “The Fed’s willingness to use innovative tools” — like its off-the-cuff creation of lending facilities to keep credit flowing on Main Street and heal bank balance sheets since 2020 — gives it “more levers to wiggle to help reduce the chance of a downturn,” Mr. Knightley said.

“Phrases like ‘This time it will be different’” generally have a bad track record, he said. “But maybe it will.”

In several ways, this time has been different so far.

Typically, the housing sector — and its interconnected industries, from construction and home improvement to real estate finance — accounts for nearly 20 percent of U.S. output . The Federal Reserve has more than quadrupled its interest-rate levels since the spring of 2022, bringing its key policy rate to over 5 percent from near zero. That drove mortgage rates to unaffordable highs and made financing new home building difficult. And the residential real estate sector, highly sensitive to interest rates, ground to a halt. But the economy as a whole continued to grow.

When in-person services plummeted during the pandemic, e-commerce and goods-buying picked up the slack. By the time millions of households were sated with goods purchases and manufacturing fell off, the in-person economy was reopening and in-person services began a booming recovery.

There are some market analysts, such as Jim Bianco of Bianco Research, who believe that the U.S. economy — in its dynamism, diversity and size — has in some respects begun to resemble the global economy itself, which typically contracts only when colossal shocks to output occur.

The global financial crisis and the Covid-19 pandemic — which were separated by only 10 years and did cause global recessions — show that while rare, such maelstroms can coincidentally occur back to back. So, long expansions are no guarantee. On the flip side, Australia went about three decades without a recession until Covid ended the streak .

Nina Eichacker, a professor of economics at the University of Rhode Island and the author of two recent papers about government responses to crises, cited another influence: a powerful school of thought that government interventions, even amid downturns, add “frictions and inefficiencies to markets” and “make us worse off overall.”

The robust federal response to the pandemic shock was enabled by a general view that it was an act of nature. Future financial stresses are more likely to have villains, which means proposed solutions are more likely to face division in Congress even if unemployment is notably rising.

But Ms. Eichacker thinks that those political limits to consensus may soften if this expansion rolls on and public opinion of the hefty federal response that helped foster it grows fonder.

“I am sometimes freaked out by how optimistic I feel about the state of things,” she said. “Economically anyway.”

Talmon Joseph Smith is a Times economics reporter, based in New York. More about Talmon Joseph Smith

Biden Cancels $7.4 Billion in Student Debt for 277,000 Borrowers

U.S. President Joe Biden delivers remarks on "student debt relief" during a campaign stop at Central New Mexico Community College (CNM) Student Resource Center in Albuquerque, New Mexico, U.S., November 3, 2022. REUTERS/Kevin Lamarque/File Photo

(Reuters) -The Biden administration will cancel $7.4 billion in student debt for 277,000 borrowers, the White House said on Friday, the latest in a series of debt cancellations.

President Joe Biden announced plans on Monday to ease student debt that would benefit at least 23 million Americans, addressing a key issue for young voters whose support he needs as he seeks re-election in November.

Those plans include canceling up to $20,000 of accrued and capitalized interest for borrowers, regardless of income, which Biden's administration estimates would eliminate the entirety of that interest for 23 million borrowers.

The latest round of debt relief affects 277,000 Americans enrolled in the SAVE Plan, other borrowers enrolled in Income-Driven Repayment plans, and borrowers receiving Public Service Loan Forgiveness, the White House said in a statement.

It follows an announcement in March that $6 billion in student loans would be canceled for 78,000 borrowers.

The administration said on Friday it has approved $153 billion in student debt relief for 4.3 million Americans.

Biden, a Democrat, last year pledged to find other avenues for tackling debt relief after the U.S. Supreme Court in June blocked his broader plan to cancel $430 billion in student loan debt.

The campaign of former President Donald Trump, Biden's Republican challenger in the White House race, in March criticized the student loan cancellation as a bailout that was done "without a single act of Congress."

The issue remains high on the agenda of younger voters, many of whom have concerns about Biden's foreign policy on the war in Gaza and fault him for not achieving greater debt forgiveness.

Republicans have called Biden's student loan forgiveness approach an overreach of his authority and an unfair benefit to college-educated borrowers while other borrowers received no such relief.

Roughly half of federal student loan debt is held by people with a graduate degree, according to the Brookings Institution think tank. An August 2023 report by the Department of Education said graduate students received the highest share - 47 percent - of federal student loan disbursements from 2021-22, even though they accounted for only 21 percent of all borrowers.

(Reporting by Gursimran Kaur in BengaluruEditing by Peter Graff, Sharon Singleton and Chizu Nomiyama)

Copyright 2024 Thomson Reuters .

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Tax changes small business owners should be aware of as the tax deadline looms

FILE - A cash register is seen on the front counter at the Alpha Shoe Repair Corp., Feb. 3, 2023, in New York. As Tax Day, April 15, approaches, there are plenty of things small business owners should keep in mind when filing taxes this year. (AP Photo/Mary Altaffer, File)

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As Tax Day approaches, there are plenty of things small business owners should keep in mind when filing taxes this year.

April 15 is still the annual tax deadline for many small businesses although, unlike individuals, small businesses can have varying deadlines depending on the type of company, the state the taxes are filed in, and other factors. Quarterly estimated tax payments are generally required throughout the year. And certain types of small businesses had to file by March 15.

Since business tax filing is complex, most experts recommend small business owners work with a professional tax adviser rather than trying to file on their own or even with tax-filing software.

“Taxes should not be scary, especially when you have a certified tax professional or someone who is your trusted adviser,” said Amber Kellogg, vice president of affiliate origination and management at business consultancy Occams Advisory. “I always say you don’t go to the dentist to get your oil changed, and you certainly shouldn’t do (taxes) yourself unless you’re an expert.”

But even if small business owners aren’t filing taxes themselves, it’s still important to stay informed about any tax changes during the year. Here are things small business owners should consider as the April 15 deadline looms.

Consider an extension

Because of some pending tax legislation in Congress this year, Mitch Gerstein, senior tax adviser at accounting firm Isdaner & Co., said it might be a good idea to file for an extension. When you file an extension you still pay estimated taxes, but final paperwork isn’t due until September.

This gives your tax provider adequate time to file a return. And it’s cheaper to file an extension than an amended return, which costs more in administrative fees.

One reason Gerstein recommends an extension this year: a bonus depreciation write-off used by many small businesses is set to decrease for 2023. The bonus depreciation allowance was designed to spur capital purchases and it let businesses write off 100% of certain new and used assets in 2022. But beginning in 2023, that will decrease to 80% for used assets, dropping another 20% each year thereafter. However, a tax bill pending in Congress could restore the write-off to 100%. It’s rare that there is such a significant tax bill pending in Congress when taxes are due, Gerstein said.

Optimize your retirement plan

The Secure Act 2.0 passed by Congress in late 2022 gives small businesses some tax advantages if they offer a retirement plan. There’s a tax credit for small businesses starting new employee plans. The credit is up to 100% of the startup costs for adopting and maintaining a new 401(k) plan, capped at $5,000. There’s also a tax credit based on employer contribution, up to $1,000 annually per employee, over the plan’s first five years.

Changes in research and development write-offs

Scott Orn, chief operating officer of Kruze Consulting, works with startups backed by venture capital. Orn said the number one concern his clients are calling about is “Section 174,” a part of the tax code that involves writing off research and development costs.

In the past, companies were able to deduct 100% of research and development expenses from their taxable income. That was helpful because often that deduction meant the company was operating at a loss and wouldn’t have to pay taxes.

But starting in 2022 due to new legislation, companies have had to “capitalize” the expense – or spread it out over several years. That means they must now write off the expenses over five years for U.S.-based R&D, or 15 years for foreign R&D expenses.

Large and small companies alike are affected by the change, but small businesses are hurt the most, Orn said.

“(Small businesses) are the ones who are swinging into profit where they thought they were like safely losing money and not ever going to pay taxes for a while,” Orn said. “And that’s why it’s such a big surprise for them. It’s hurting people, it’s like it’s a lot of money these companies don’t have.”

Avoid underpayment penalties

Yet another reason for small business owners to use a tax professional is the fact that underpaying will cost more this year. In the past, underpayment penalties hovered at around 3%, but this year they’re more than double at 8% . That’s because the penalties are based on the federal short term interest rate plus three points, said Danny Castro, Florida Market Tax Leader at BDO USA, part of BDO Global, a global accounting network.

“The cost of underpayment is as high as it’s been in a long time,” he said.

One credit to skip: the ERC

At one time, the pandemic-era Employee Retention Credit seemed like a boon for small businesses. Designed to help small businesses keep employees during pandemic-era shutdowns, the generous credit let businesses file amended tax returns to claim the credit.

But that led to a cottage industry of scammers trying to entice small businesses to help them file for the credit – for a fee – even if they didn’t qualify. The IRS has launched several initiatives to claw back some money improperly given to businesses. To date, the IRS said 500 taxpayers have given back $225 million via a voluntary disclosure program, which ended on March 22, that let small businesses who thought they received the credit in error give back the money and keep 20%. And 1,800 businesses have withdrawn unprocessed claims totaling $251 million.

Get organized, stay organized

The best thing small businesses can do to help their tax advisers file their taxes is stay organized. A shoe box full of receipts isn’t helpful when trying to file timely taxes. Owners should log receipts in an orderly database they can turn over to their adviser. And stay on top of quarterly estimated payments.

“(Small business owners) need to be able to keep accurate records throughout the year and not have to go back in April and go, gosh, what what was this receipt for,” said Occams Advisory’s Amber Kellogg, “Keeping those, accurate records is very, very important.”

This story has been corrected to show that BDO USA is part of BDO Global, not BBO Global.

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Surge in US small businesses started as side hustles

The percentage of small businesses launched as side-hustles last year was nearly double the share in 2022.

March jobs report showed some problematic trends: Joanie Bily

Employbridge’s Joanie Bily explains what the March jobs report says about the state of the U.S. economy on Making Money.

The percentage of small businesses that were launched last year by owners who were working for someone else soared nearly two-fold from 2022, according to new data.

A recent survey of 1,300 new business owners conducted by payroll firm Gusto found the share of new business owners working full-time or part-time for another employer while starting their business surged from 27% in 2022 to 44% in 2023. 

A networking event for small business owners. (iStock / iStock)

Gusto principal economist Liz Wilke told FOX Business in an interview that when she saw the numbers, she thought, "Wow, that is a really big jump…and when you have a big jump like that, it's usually not just one thing."

ONE-THIRD OF SMALL BUSINESS OWNERS WORRIED THEIR COMPANY WON'T SURVIVE 2024

Wilke believes there are multiple factors that contributed to the surge. One, which is not specific to 2023, is that the rise in remote and hybrid work has created a lot of flexibility for time and space for people to work at their regular jobs and side jobs alike.

However, she said there were also a few things at play last year that led to the jump from 2022.

"One is 2023 sort of saw the crest of inflation after a full year-and-a-half to two years of really hard inflation – things are still quite expensive," Wilke said. "That, coupled with the fact that the economic outlook really feels a little wobbly to some people right now."

Police say the woman took the money out of the cash register after pretending to be an employee of the restaurant.  (Mills Hayes/Fox News / Fox News)

That combination along with the fact that people no longer have to quit their jobs to start a business the way entrepreneurs used to in the past is fueling the trend.

She reasoned that when people's budgets became tighter, those working on side-hustles had the option to slow-roll their businesses, take time to develop their products and build up their savings before they take the leap to full-time business owners.

HOUSE COMMITTEE WARNS DOL NEW INDEPENDENT CONTRACTOR RULE THREATENS SMALL BUSINESSES

The survey found that while many startup founders quit their regular jobs to focus on their new venture at some point, 49% of workers who started their business as a side gig are still working at their old company.

Another aspect Gusto asked respondents about was generative artificial intelligence, which burst onto the scene with the release of OpenAI's ChatGPT in late 2022.

Laura Massey, center, talks to customers at Beetz Me in Princeton, Illinois, U.S., on Monday, June 11, 2012. (Photographer: Daniel Acker/Bloomberg via Getty Images / Getty Images)

Nearly three quarters of the companies surveyed who were using some generative AI tools were using it for a marketing purpose, such as building out a website, building content or writing content. The second most common use for AI was sales, with 41% utilizing AI tools for that purpose.

Given how much time AI tools can trim from those types of time-intensive tasks, Wilke believes the rapidly-evolving tech is also playing a part in the increase in side-hustle ventures.

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"I don't think it's accounting for all of the jump," she told FOX Business. "But I wouldn't be surprised if side hustlers weren't really using some generative AI tools to cut a lot of the time commitment that's required at the very start of a business when they're really just trying to their brand out, get a reputation, build some revenue streams."

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DoD Releases 2024 DoD Commercial Space Integration Strategy

Today, the Department of Defense released the 2024 DoD Commercial Space Integration Strategy. In line with the National Security Strategy and the 2022 National Defense Strategy, this strategy seeks to align the Department’s efforts and drive more effective integration of commercial space solutions into national security space architectures.

This strategy identifies four top-level priorities that the Department will pursue to maximize the benefits of integrating commercial space solutions:

•  Ensure access to commercial solutions across the spectrum of conflict;
•  Achieve integration prior to crisis;
•  Establish the security conditions to integrate commercial space solutions; and
• Support the development of new commercial space solutions for use by the joint force.

The Department will adhere to four foundational principles in its strategy, balance, interoperability, resilience, and responsible conduct, to ensure that commercial solutions are integrated into national security space architecture.

To integrate commercial space solutions, the Department will work with commercial entities to mitigate risk as necessary and accept risk where appropriate. Such integration will help deny adversaries the benefits of attacks against national security space systems and contribute to a safe, secure, stable, and sustainable space domain.  

You can read a copy of the strategy here .

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FACT SHEET: President   Biden Delivers Update on His Strategy to Build on America’s Small Business Boom, while Speaker McCarthy and House Republicans Threaten to Harm Small Businesses and Eliminate   Jobs

New Report Card and Analysis Released On How the Biden-Harris Administration Has Ushered in Record New Business Formation

Today, in honor of National Small Business Week, President Biden is hosting small business award winners from all 50 states at the White House to celebrate their contributions to the dynamism and strength of the U.S. economy, and releasing a report card that highlights the small business boom taking hold as a result of the President’s small business agenda. From distributing billions in pandemic assistance, to expanding access to capital and leveraging billions in federal dollars from the Investing in America agenda, this new report card lays out how the Biden-Harris Administration has taken action to support small businesses. Additionally, the Council of Economic Advisers is releasing a new analysis that identifies the potential benefits to small businesses from the hundreds of billions being invested through the President’s Investing in America agenda. Americans filed nearly 10.5 million applications to start new businesses in 2021 and 2022, the two highest years on record for new business formation. Since President Biden and Vice President Harris took office, small businesses have created 3.1 million jobs, a near historic level. At the same time, the Biden-Harris Administration has increased enforcement against tax evasion by big corporations, and instituted a corporate minimum tax so that small businesses can fairly compete against big corporations with complex tax schemes that reduce their tax burden well below what small businesses pay. Last week, as part of a reckless attempt to extract concessions as a condition for the United States simply paying the bills it has already incurred, House Republicans passed a bill that would put this small business boom at risk. According to Moody’s Analytics , the bill would lead to 780,000 fewer jobs by the end of 2024 and would meaningfully increase the risk of recession. Biden-Harris Investments and Reforms to Support Small Businesses President Biden will host National Small Business Week award winners from all 50 states, the District of Columbia and Puerto Rico at the White House and announce the following:

• A new Small Business Report Card demonstrating across-the-board progress . Released in April 2022, the Biden-Harris Small Business Strategy laid out 35 initiatives designed to maintain the nation’s historic momentum in fostering new business creation. The report card shows significant progress on all 35 initiatives, including delivering billions of dollars in loans and support services.
• New Small Business Administration (SBA) guidance strengthening more than 100 nonprofit, mission-driven lenders. The Community Advantage Pilot Program allows nonprofit lenders, with a proven track record of higher rates of lending to Black, Hispanic, women, and veteran-owned businesses, to make SBA-backed loans. A permanent license will provide these lenders with long-term certainty.
• Applications will open in June 2023 for non-bank lenders applying for Small Business Lending Company (SBLC) licenses. Last month, SBA finalized a rule that will allow the agency to issue new SBLC licenses for the first time in 40 years. This change will expand competition in small business lending and address capital gaps by expanding loans to minority and rural small businesses.

House Republican Proposal Would Harm Small Businesses, Eliminate Jobs Speaker McCarthy and House Republicans are holding the economy hostage by refusing to avoid default without slashing billions in funding for vital programs that support small businesses. Their bill would: 

• Slash almost $2 billion from a vital small business initiative, reducing needed capital for up to 10,000 small businesses and support for 100,000 jobs. The Republican proposal would claw back up to $1.8 billion from Treasury’s State Small Business Credit Initiative, particularly harming small business loans and equity investments for tribal and other underserved entrepreneurs.
• Exacerbate Access to Capital Gaps.  The Republican cuts would slow loan approvals, impede new lender registration, reduce lender oversight, and impede technology updates and customer service for small business applicants, forcing small businesses to seek more expensive non-SBA capital options.   
• Eliminate free business counseling for 295,000 small businesses owners.
• Delay certification and training to 15,000 or more small business contractors . Republican cuts would slow training and the review of certification applications, denying services to 15,000 or more businesses annually.
• Let more pandemic fraudsters escape prosecution. The plan undermines the SBA Office of Inspector General’s ability to fight fraud, prosecute criminals, and recoup stolen relief funds by rescinding all balances for COVID oversight.
• Abandon Businesses Recovering from Natural Disasters . SBA would have to reduce its disaster staff by nearly 50 positions, hurting SBA’s ability to respond quickly when a disaster strikes to ensure access to capital for disaster survivors.
• Rescind up to $575 million in support for small businesses provided by Community Development Financial Institutions and Minority Depository Institutions through the Emergency Capital Investment Program. These funds were designed to help these institutions provide support to small businesses in underserved communities.
• Slash support for small businesses that export goods and services . The House Republican proposal would reduce support to more than 43,000 small businesses served by the International Trade Administration, including supporting-first time exporters, resolving unfair trade practices, and trade disputes. Small businesses would also have less access to State Trade Expansion Program funding provided by SBA to state and territory governments to support small business export development.
• Reduce support for thousands of rural businesses .  The Republican proposal would cut funding for the U.S. Department of Agriculture’s Rural Development Business Programs, resulting in more than 2,000 rural businesses—nearly all small businesses—losing access to this assistance. 

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